Standards across borders: crossborder diffusion of the arm's length standard in North America

The ann's length standard is used by corporate income tax authorities to pr ice international intracorporate transactions and allocate intracorporate i ncome and expenses of multinational enterprises. In this paper, we examine the socio-historical evolution of transfer pricing regulation in North Amer ica. We develop a model of crossborder diffusion of standards, using instit utional theory and the logic of embeddedness, that focuses on three compone nts of crossborder diffusion: timing, motivation and form. Our model is the n applied to the evolution and diffusion of the arm's length standard withi n North America from 1917 to the present. (C) 2000 Elsevier Science Ltd. Al l rights reserved.